Inflation Inched Higher in April, Reflecting Challenge for the Fed

A measure of inflation was the most closely watched by Federal Reserve officials in April, reflecting a tough road ahead for economic policymakers as they consider whether to stop stubborn price increases. The interest rate should be increased again to reduce it.

Personal consumption expenditure Index climbed 4.4 percent. A year ago in April. That was a slight increase from March, when prices rose 4.2 percent on an annual basis. Still, prices aren’t rising as fast as they were in February, when The index gained 5.1 percent. on an annual basis.

A “core” measure that tries to gauge trends in core inflation by stripping out volatile food and energy prices rose 4.7 percent year-on-year in April, up slightly from 4.6 percent in March.

The core measure rose 0.4 percent in April from the previous month, up from 0.3 percent in March. Core inflation was rising at a faster pace earlier in the year, climbing to 0.6 percent in January.

Reflects the data Recent moderation in prices Compared to previous months, but it also highlighted how stubborn inflation has been. That could complicate the path forward for Fed officials, who began raising interest rates last year to cool the economy and slow inflation.

Feed Interest rate has increased by a quarter point. earlier this month, the 10th consecutive increase since last year. Policymakers have indicated they may hold off on another hike at their next meeting on June 13-14. Minutes of the last meeting of the Fed It appears that the officials were divided. On their next move, several lean toward a pause.

“Several participants noted that if the economy develops according to their current outlook, no further policymaking will be needed after this meeting,” Minutes said.

Still, central bank officials have so far left the door open to another rate hike next month, reiterating that they will focus on inflation, the labor market and Tightening of credit conditions From recent bank failures.

A big wild card for the Fed is overshooting the debt ceiling. The White House and the Republicans are. Trying to reach an agreement. To raise the borrowing limit before June 1, when the United States may run out of cash to pay all its bills on time. Failure to raise the debt ceiling in time to avoid a default on US debt is likely to send the economy into a tailspin.

Policymakers discussed the possibility in May, according to minutes of that meeting, with many officials saying it was “essential that the debt ceiling be raised in a timely manner” to prevent serious damage to the economy and roiling financial markets. can avoid the danger of

Federal Reserve Governor Christopher Waller said A speech On Wednesday that another rate hike in June could be warranted, but it was too early to tell.

“Whether we should extend or skip the June meeting will depend on how the data comes in over the next three weeks,” Mr Waller said.

Although Fed officials have noted that inflation has eased in recent months, they have described it as “unacceptably high” and far from the central bank’s 2 percent target.

He also acknowledged some cooling in the labor market, as the numbers Employment opportunities have fallen recently. But Fed officials have said labor market conditions are still very warm, pointing to Solid monthly employment benefit, Stable wage growth And the unemployment rate near historically low levels.

Policymakers have repeatedly said that easing the labor market will be needed to bring inflation back to normal levels. Officials acknowledge that wage increases did not initially drive up prices, but they fear that faster wage increases will make inflation more difficult to control.

“A looser labor market, to help us in our fight against inflation, doesn’t mean a recession or a big loss of jobs,” Mr. Waller said. “But we need to see much more easing to help lower inflation.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *